Another chapter in the long-running legal battle between Marstons Mills resident Michael Daley and the Plymouth Retirement Board has ended with Daley being stripped of pension earnings.

Daley petitioned the state Division of Administrative Law Appeals for relief after the Plymouth Retirement Board earlier this year voted to deny Daley his ongoing pension payments and moved to collect some back payments.

The retirement board alleged Daley, as sole owner of Financial Advisory Associates (FAA) consultants, collected some $324,000 between 2007 and 2010 working as a financial adviser to various municipalities, including Barnstable, and government agencies in contravention of state law. The amount was calculated from invoices to Daley from various state municipalities.

The specific law, Chapter 32, Section 91 prohibits state and municipal government retirees from receiving payments for services to government entities in excess of certain limits above public pension earnings.

In a finding dated Oct. 4, 2013, administrative magistrate Richard C. Heidlage said Daley’s appeal “…of the retirement board’s determination that he had excess earnings for certain years is dismissed.”

Daley’s appeal wasn’t much helped by his repeated refusal to comply with the retirement board and the administrative law court’s order to supply the board with total earnings during the years in question.

Daley’s refusal to do so “…warrants an adverse inference that if the evidence had been produced, it would have disclosed earnings sufficient to preclude payment of his pension,” the finding states.

This is an interesting case for two major reasons: First, it serves as a warning to other former government employees who may be exploring ways to beat the pension system. One source said there is at least one other similar case on Cape Cod involving a former police pensioner from an off-Cape town who is now living on the Cape and conducting a consulting business. If true, there is obviously a pension system somewhere that isn’t practicing due diligence.

Second, it offers insight to the complexity of running large civil systems and creating laws that protect those systems from the occasional charlatan who would abuse them for self-gain.

The original wording in the law passed by the state Legislature to prevent abuse of public pension systems was intended to prevent public employees from taking early retirement only to resurface at the same or similar government jobs as much higher-paid consultants, thereby giving themselves a raise while also collecting a pension.

The legislators goofed by leaving a loophole in the law that covered only “employees,” leaving out “consultanrts.”

Part of Daley’s defense, under that original law, was that he was not an “emplpyee” of any government agency or municipal government but rather, a consultant working for a company, FAA (Financial Advisory Associates) and therefore not covered by the law. However, in 2009, the Legislature, seeing its goof, added wording to include independent contractors popularly labeled “consultants.”

Daley had found refuge in an opinion from the Public Employee Retirement Administration that supported his contention that as an independent contractor he was exempt from the law.

In keeping with that belief, Daley refused to hand over complete earnings records including IRS returns demanded by the Plymouth Retirement Board and subsequently ordered by the Division of Administrative Law Appeals, from which Daley had sought a reconsideration. That move resulted in a finding against Daley and the order to comply with the retirement board’s request for earning records.

The order to produce earnings evidence also included a notation that “failure to respond to this order to show cause on or before Sept. 15, 2013, will result in dismissal.”

Counsel for Daley had argued that since no evidentiary hearing had been held, the appeals board had no authority to dismiss Daley’s appeal. And that Daley had every right to withhold relevant evidence.

But the appeals board countered that “Because the petitioner (Daley) has refused to provide any of the financial records ordered to be produced and because he is solely in possession of the evidence relevant to his earnings, it is impossible to determine the amounts he earned in an evidentiary hearing.”

Heidlage, the hearing officer, therefore concluded ”…that it is appropriate to infer that, if the records had been produced, they would have established that the amounts of his earnings subject to General Law 32, Chapter 9 exceeded his allowable earnings by an amount in excess of his pension…”

Daley is treasurer of the West Barnstable Fire District as an independent contractor. According to town records of 2007-2011 during the Klimm administration, Daley was paid $29,600 for analyses of the police and information technology departments in 2007 and 2008; paid $5,000 in 2009 and $5,000 in 2010 for “comparative educational benchmark measurement analysis” and for a “zoning enforcement program review.”

Other payments to Daley include $7,500 and $4,900 in 2011 for the “Professional Municipal Management Consulting Services for the Regulatory Services Department.” The town had received two bids, one from Dhillon Management Systems at $25,800 and one from Financial Advisory Associates at $15,000, low bidder.

It is not known whether Daley will pursue the issue in civil court. He could not be reached for comment before press time.